Selling your own things
Most things you own for personal use, such as clothes, furniture and electronics, lose value over time. When you sell them for less than you paid, there’s no profit, so there’s no tax to pay. You also can’t deduct the loss.
If you sell a personal item for more than you paid, such as a collectible, a piece of jewelry or limited-edition sneakers, the profit is a capital gain and is taxable. The IRS says you must report income from goods “sold at a gain”. Keep a note of what you paid.
Selling as a business
If you buy things to resell, or make things to sell, regularly and with the aim of making a profit, the IRS is likely to see it as a business. You report the profit (sales minus costs such as what you paid, fees and shipping) on Schedule C. If your profit for the year is $400 or more, you also pay self-employment tax. If you sell now and then for fun without really trying to make a profit, it may be a hobby: hobby income is still taxable, but hobby costs can’t be deducted. See the IRS guide to hobby or business.
Form 1099-K
Payment apps and online marketplaces such as eBay, Poshmark, Mercari and Etsy must send you, and the IRS, a Form 1099-K if you’re paid more than $20,000 for goods in more than 200 sales in a calendar year. They can send one for less, and a few states set lower limits for state tax. Getting a 1099-K doesn’t mean you owe tax: if the money came from selling personal items at a loss, there’s nothing to pay, but you may need to show that on your tax return. Source: IRS: Understanding your Form 1099-K.
Sales tax
When you sell on eBay, Poshmark, Mercari, Depop or Etsy, the platform collects sales tax from the buyer and pays it to the state for you, so you don’t have to. If you also sell regularly on your own website, at markets or at a shop, you may need a seller’s permit from your state. Check with your state’s tax department.
State income tax
Most states tax income too, with their own rules. A business’s profit is usually taxable in your state as well as federally.
Keep simple records
- What you paid for items you resell, with receipts if you have them.
- What each item sold for, and the fees and shipping.
- Any Form 1099-K and the annual summary each platform gives you.
This page is general information, not tax advice. For your own situation, check irs.gov or ask a tax professional.